§ 11.19 a.m.
§ Lord Hatch of Lusby asked Her Majesty's Government:
§ Whether in January and February 1985 5 billion dollars passed across the exchanges in support of the pound and whether they can say what was their origin.
The Earl of CaithnessMy Lords, a 1986 Bank of England survey estimated that the average daily turnover of the London foreign exchange market was about 90 billion dollars, undertaken in a variety of currencies. It is impossible to identify the source of individual components of the overall figure.
§ Lord Hatch of LusbyMy Lords, is the Minister aware that on 29th January 1985 the Sultan of Brunei was entertained by the Prime Minister, and that a few weeks later 5 billion dollars from the Sultan of Brunei was passed through the exchanges in support of the pound? Is the Minister further aware that in the following March approval was given for the Al-Fayed takeover of the House of Eraser? At the same time the bid by Lonrho was blocked by the DTI's inquiry. Is the Minister aware of those three events and is there any connection between them?
The Earl of CaithnessMy Lords, I am aware from the DTI report that the Sultan visited London in January 1985. With regard to any agreement with the Sultan about supporting sterling, I have absolutely no knowledge.
Lord Bruce of DoningtonMy Lords, will the Minister confirm that the DTI report went a little further than notifying the public that the Sultan visited London? If the noble Earl turns to Chapter 15 of the DTI report (at page 286) he will find that the Sultan of Brunei, accompanied by Mohamed Al-Fayed, visited the Prime Minister on 29th January and later that day also visited Kleinwort Benson who played some part, I think it will be agreed, in the later transaction to which my noble friend referred. Is the Minister aware that it may well be in the public interest from time to time for governments to seek support for the British currency? At that time the exchange was running at 1.15 dollars or 1–05 dollars to the pound. Therefore it is quite reasonable for any government to take whatever steps are open to them in order to obtain support.
What is not clear in this case is from where the support came. Does the Minister agree that it would be unfortunate to say the least if the public ultimately had the impression that those two matters were linked and that a favour might have been owed to the Sultan of Brunei, or the holder of his proxy. Al-Fayed, which might have given the impression that our obligation was later discharged by the takeover to which my noble friend referred?
The Earl of CaithnessMy Lords, as I said in my opening Answer, the Bank of England survey showed that about 90 billion dollars was the annual daily turnover. It is impossible to identify the resources from which those funds came. As to government intervention, it has been the practice of successive governments never to disclose details of past or present interventions in foreign exchange markets.
§ Baroness PhillipsMy Lords, is the Minister aware that under the Companies Act any small company would hardly get away with such an answer when confronted by the auditor?
The Earl of CaithnessMy Lords, I am not quite sure to which of the many answers I have given the noble Baroness refers.
§ Baroness PhillipsMy Lords, perhaps I may enlighten the Minister. He said that it was impossible to identify the money. Does he agree that it is a curious kind of book-keeping that the Bank of England is operating?
The Earl of CaithnessNo, my Lords. With respect, the duty of the Bank of England is to monitor the foreign exchange markets. It so happens that in 1986 the Bank did a survey and kept a daily total. That is why I was able to give a rough figure.
§ Lord MellishMy Lords, I am an amateur in economic matters. Will the Minister explain to me how it is possible that we are now discussing Harrods and a takeover bid? How is that linked up with the Question on the Order Paper?
The Earl of CaithnessMy Lords, I quite agree. I find it difficult to see in such allegations any 509 consistency at all. I have answered the Question that was put down on the Order Paper.
Lord Bruce of DoningtonMy Lords, further to the intervention of my noble friend will the Minister agree that I put my question to him very temperately? I simply asked him to clarify the position. I regret that so far he has not been able to do so. Is he by inference telling the House that the Sultan of Brunei and Mr. A1-Fayed went to the Prime Minister to discuss the weather?
The Earl of CaithnessMy Lords, whether or not they discussed the weather I do not know, but it is true that the Sultan met the Prime Minister.
§ Lord Sefton of GarstonMy Lords, the Question seems to contain an implied connection between the visit to the Prime Minister and the subsequent approval of the takeover with regard to the Sultan supporting the panel. That is a very serious implication. Will the Minister give an assurance that he will look into the matter and submit a further report to this House in order that we know whether there is some substance in the allegation?
The Earl of CaithnessMy Lords, a very full Staterment was made by my right honourable friend the Secretary of State in another place, and it was repeated by my noble friend Lord Trefgame. There is also to be a debate next week. I have nothing further to add.
§ Lord Sefton of GarstonMy Lords, I asked this question: will the Minister himself look into the matter and then give the House a report on his findings?
The Earl of CaithnessMy Lords, the noble Lord links two points. One is allegation; the other is a question about which there has been a report from the Department of Trade and Industry.
§ Lord Sefton of GarstonMy Lords, I persist in my question which has not yet been answered. Will the Minister look into the implications of the Question asked this morning and report back to this House?
§ Lord LyellMy Lords, perhaps I may suggest that my noble friend asks the noble Lord to have patience. Perhaps we can all discuss what is clearly in his mind and indeed in the mind of the noble Lord, Lord Hatch, next Wednesday.
§ Lord Sefton of GarstonMy Lords, the noble Lord seems to be very sensitive. I did not put the question to him.
§ Lord Hatch of LusbyMy Lords, is the noble Earl not perfectly well aware that there is a connection, as shown by the DTI's own report, between the Sultan of Brunei and the Fayed brothers who took over the House of Fraser? There have been very serious allegations made in that DTI report about the probity of the Fayed brothers and their takeover. Why have the Government taken no action under the Company Directors Disqualification Act 1986?
510 Why has the Governor of the Bank of England not taken any action under the Banking Act 1987, in particular Section 39, on the basis of the statements made in the DTI report?
The Earl of CaithnessMy Lords, if the noble Lord is alleging fraud, that is a matter to be dealt with by the prosecuting authorities.
§ Lord Hatch of LusbyMy Lords, it is the responsibility of the Government and in particular the DTI and the Governor of the Bank of England. The matter has been put before the serious fraud committee. As a result of the investigation, why has no action been taken under either of the Acts that I mentioned?
The Earl of CaithnessMy Lords, as I fully expected when I saw the Question on the Order Paper, the real purpose of the noble Lord, Lord Hatch, is to ask a totally separate question which is not related to the Question on the Order Paper.